The consumer sits in an interesting place in the United States economy. Consumer spending accounts for nearly 70 percent of gross domestic product — the broad measure of goods and services produced in the country. Moreover, consumption constitutes the endpoint of the economic process. But the consumer also is, as I have argued many times, a follower. That is, consumers take their cues largely from businesses, entrepreneurs and investors.

If entrepreneurs are starting businesses, businesses and investors are investing in innovations and expansions and businesses are hiring, consumers feel secure and optimistic and spend accordingly. However, if businesses aren’t be created, investment lags or businesses aren’t hiring or they’re laying people off, consumers rein in their spending.

So, where is the consumer of late? Let’s consider three key reports.

The GDP report for the first quarter of 2024 showed that growth in real personal consumption expenditures (PCE) slowed markedly. Growth in real PCE registered a seasonally adjusted annualized rate 1.5 percent in the first quarter. That was down from 3.3 percent in the fourth quarter and 3.1 percent in the third quarter.

The latest measure of consumer confidence from the Conference Board ticked down in June and continued to show consumers were split over where the economy is now and where it might be headed. The divergence between the two components of the Consumer Confidence Index — the Present Situation Index and Expectations Index — persisted. The Consumer Confidence Index moved down from 101.3 in May to 100.4 in June. The Present Situation Index based on consumer assessments of current business and labor market conditions moved up from 140.8 in May to 141.5 in June. The Expectations Index — which reflects the short-term outlook for income, business and labor market conditions — decreased from 74.9 in May to 73 in June.

Then there’s the latest read on consumer credit outstanding from the Federal Reserve. In May, revolving credit — mainly credit cards — grew at an annualized rate of 6.3 percent. Meanwhile, nonrevolving credit — including automobile loans and all other loans not included in revolving credit, such as loans for mobile homes, education, boats, trailers or vacations, but not loans secured by real estate — grew by only 1.4 percent. It should be noted both forms of credit experienced slow growth or contraction in the previous two months, with revolving credit growth registering -0.8 percent in April and 1.6 percent in March, and nonrevolving credit growth coming in at 2.4 percent in April and -1 percent in March. Keep in mind these measures reflect changes in nominal dollars. Once inflation is considered, the real changes are diminished.

While these various data aren’t in complete agreement, the overarching message seems to be consumers are cautious or worried about where the economy is headed.

That has been the same message delivered by small business owners in various surveys, including the Small Business & Entrepreneurship Council small business check up surveys conducted over the course of the past year. The results of a new survey will once again report widespread worry about the direction of the economy.

Consumers take their cues from businesses.